2006.02.06: February 6, 2006: Headlines: Figures: Journalism: Staff: Internet: Business: Business Models: Online Journalism Review: The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy

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The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy

The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy

Peters had spent much of his time figuring out why some programs worked and others didn't -- and he decided the entire government needed the same type of critical analysis. So after leaving government, he tapped some friends and started the Monthly to be an independent watchdog. Charles Peters was Director of Evaluation for the Peace Corps under founding Director Sargent Shriver.

The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy

New media age, new marketing strategies

'Journalism business' doesn't have to be an oxymoron, three case studies show.

By Amos Gelb

Posted: 2006-02-05

[Excerpt]

If you listen to talk show pundits, read editorials and study surveys, you might believe those business pressures are actually so insidious that they are undermining the very soul of American journalism. The perception that American journalism is in trouble is underscored by scandals such as the CBS's reliance on fake documents to challenge President Bush's National Guard service -- or the charges of abuse of the Koran at the Guantanamo Bay prison camp that were retracted by Newsweek only after they fueled deadly riots in Muslim countries.

Journalism, so the cry goes, is caught in a vicious downward spiral: As profits are chased, standards drop. And as standards drop, readers and viewers lose trust and turn away from mainstream journalism. Audience loss makes it harder to earn money from advertising, leading to further chasing of ratings and circulation goals, and further lowering of standards to appeal to the lowest common denominator.1

But as the washingtonpost.com, some print publications and a number of television outlets are proving, this stereotype of the effect and cause relationship between declining journalism standards and economics is far from a universal truth. The success of those who are thriving lies in not complaining about what is happening but rather in embracing it, addressing the changes and exploiting the new opportunities they open.

[Excerpt]

The Washington Monthly

Hurts so good

There's nothing like trying to revive a moribund institution, let alone betting your own money on it. "I haven't had a real vacation in a year, I have never worked harder in my life and I have never had as much fun as I am having now," says Paul Glastris, Editor-in-Chief and co-owner of The Washington Monthly, musing about what he's got himself into.

If the Discovery Times Channel's Vivian Schiller is trying to create something new to extend an established brand, Paul Glastris' canvas is a 37-year-old niche publication in a less-than-commercial niche of the magazine industry. The core of his challenge lies not in boosting the magazine's falling circulation and rebuilding its finances, but rather in restoring its reputation as an aggressive, independent political journal doing the kind of journalism other publications aren't been. But first he had to make sure his magazine didn't fold.

Glastris remembers his first day on the job in 2001: "All we had was two working computers, one Internet line and we were not making a dime. It was an institution teetering on the brink, but we had incredible brand credibility."

All soul, no cash

The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy. In that position Peters had spent much of his time figuring out why some programs worked and others didn't -- and he decided the entire government needed the same type of critical analysis. So after leaving government, he tapped some friends and started the Monthly to be an independent watchdog.

For the first three decades of its existence, the magazine had three defining characteristics. The first was that it was driven by its mission and as such was the embodiment of its founding editor, Charlie Peters. The mission quickly earned the magazine a reputation as a quality political journal.

The second characteristic was that it became known as the farm team for generation after generation of the nation's leading political journalists, who would spend a brutal two years early in their careers editing the magazine for Peters in virtual slave conditions. Journalists like Nicholas Lemann, now dean of the Columbia School of Journalism; Michael Kinsley, the founder of Slate; and James Fallows, currently The Atlantic Monthly's national correspondent, all went through Peters' mill, honing their craft. It became the journalistic equivalent of clerking for a Supreme Court justice. Being a Monthly alumnus made you a member of an informal elite club. That club has become an important differentiator for the Monthly in that the alumni have remained loyal to their alma mater, creating an A-list of contributing editors and writers who guarantee the magazine's journalistic credentials.

The third characteristic was that it was an awful business. Like many small businessmen, Peters ran the Monthly in his head, supported by a mysterious web of backers such as Warren Buffett and Jay Rockefeller. Making money was never the main point, and in all but just a few years under his control, the magazine simply didn't.5

By the late 1990s, the formula that had differentiated The Washington Monthly started to unwind. As long as it was doing pioneering political journalism, its reputation could carry it. But as the Clinton era came to a close, the magazine was widely viewed as having lost its distinctive edge as an independent liberal voice. "It's hard to keep sharp after 30 years of editing," says Glastris in defense of Peters.

Peters decided it was time to retire, but he would only do so if he could guarantee the magazine's continued existence. After rejecting several suitors, Peters finally accepted an offer from Glastris -- a former US News & World Report journalist, President Clinton speech writer, and Monthly alumni club member -- and Glastris' partner and business backer, Markos Kounalakis, a former journalist who had turned Silicon Valley businessman. Kounalakis became publisher.

Keeping the lights on
Glastris and Kounalakis realized almost immediately that they had to change the fundamental business strategy of the magazine if it were to survive. But they faced a problem bigger than the Monthly's financial disarray. It was clear to both Glastris and Kounalakis that any small independent magazine was unsustainable economically in light of the downward pressure on advertising pricing and an ever more fragmented marketplace. That was particularly true for a political magazine such as theirs with a target market limited by its niche profile.

If the magazine couldn't be profitable as a for-profit company, the obvious alternative was to turn it into a not-for-profit 501 (c) 3 corporation. Ironically, the idea to make that fundamental business change did not come from either of the new owners. Rather it came from founding editor Peters who, after running the magazine for over three decades, decided to make that change a condition of his giving up control of the magazine. Though Glastris had initially planned to keep the magazine as a for-profit venture, he began to see the benefit of this new strategy.

Turning not-for-profit meant a number of new restrictions for the Monthly -- including prohibiting lobbying and limiting advertising content to 10 percent to retain not-for-profit mail discount pricing. But the magazine was never intended as a lobbying organization. It wanted to work on a bigger canvas. Moreover, there wasn't enough advertising to breach that 10 percent limit. On the upside, not-for-profit status would open new possible revenue streams from foundations and other donors, with donations being tax-deductible.

Not only is the business model more viable, but not-for-profit status is actually far more suited to the magazine's agenda of being mission- rather than profit-drive. The Glastris-Kounalakis Monthly underscored that prime imperative when the they crafted an updated positioning statement: "The Washington Monthly is mission-driven. Our aim is to be the most interesting and influential center left political magazine in society." That goal of seeking influence drives every aspect of the magazine's operations but is now married to the parallel mission of making the magazine viable enterprise.

Deciphering, undoing, rebuilding

Making the change to a viable not-for-profit enterprise meant deciphering and undoing how Peters had run the company. The first priority was to get control of a magazine that was actually owned by a web of 43 separate owners organized in a half-dozen sub-companies. That was done one phone call at a time. Glastris says, "I spent months making calls personally to the heirs of uncles who had owned shares in one of Peters' sub-companies. I would have to explain they had already lost their money -- now we were trying to do something different." By the end of 2001, ownership of The Washington Monthly was unified under Washington Monthly Corporation, of which Kounalakis is chairman.

The second step was to get the magazine's operations under control. This turned out to be more of a task than either new owner had expected. The first question they faced was: What operations? Peters had kept virtually no records to show how he managed the company. There weren't even accounting records to track cash flow. One of the more surprising discoveries, once they did start to decipher what had been happening, was that because of poor record keeping, many distributors of the magazine had not been paying anything back for two years. The Monthly had effectively been giving away its publication for free. It took months of detective work by new business manager Claire Iseli and Kukula Glastris (Paul Glastris' wife) to piece together fragmentary records so that distributors could be billed.

With a new management team in place and operations under control, Glastris and Kounalakis turned to the future, making projections and building plans. Their clear focus on the mission-driven nature of the product has been accompanied by an equally clear business formula. They want unlimited influence with limited circulation.

More specifically, The Washington Monthly has set a circulation ceiling of 40,000 subscribers. Once a publication reaches that number of subscribers, advertisers become much more willing to buy ad space, according to Glastris. But that becomes problematic for the Monthly because, as a non-profit, IRS code says that a publication can’t carry more than 10 percent advertising, which is much less than commercial publications generally carry.

Glastris believes that at 40,000 subscribers, he can attract the right amount of advertisers and still maintain editorial direction. Exceeding that number would, Kounalakis says, force the magazine "to change its voice and focus to attract a much broader audience by focusing on political personalities and taking on more of the tricks and tone of GEORGE [the now-defunct political magazine], and we aren't prepared to do that."

Making something with nothing

The marketing challenge for the Monthly is to reach its limited circulation goal while seeking unlimited growth in its influence on a not-for-profit (read small) marketing budget.

Virtually all the money goes into a direct marketing campaign (last year $250,000) built on subscriber lists from similar political magazines, which experience has shown produce the highest potential for success. Both Glastris and Kounalakis are pleased with the response rate for the direct mail campaign -- ranging between 2.5 and 4.5 percent -- which helped increase the number of subscribers from 15,000 in 2001 to 25,000 today, with an additional 5,000 copies purchased at newsstands.

Other than direct mail, The Washington Monthly does virtually no traditional promotion. The magazine's own website has a link for new subscriptions. There is no paid external advertising.

The Washington Monthly's real success is how it has waged an unorthodox marketing campaign, leveraging the external political environment. As a liberal political journal, Glastris openly credits the Republican administration with driving readership growth. "George Bush is the best thing that happened to our magazine," says Glastris. "What is bad for the country is good for us. Just as Bill Clinton was a God-send to the right-wing press, George Bush is good for the business of liberal political journalism."

That in turn leads to the most efficient promotion strategy from Kounalakis's perspective: viral marketing. "Some of our best marketing is done by readers who see a piece that some other magazine or blog cited, and pass it on." This free marketing is a product of the new media age: Now readers who want to pass on articles can simply e-mail links. This viral marketing serves as both a promotional strategy and satisfies the magazine's mission of spreading its influence.

Future past
Of course, none of that viral marketing would be happening if there wasn't something worth talking about. The strength of the Monthly had always been its aggressively independent, liberal journalism. Glastris has made it his personal mission to restore that journalistic character but update the context to reflect the new political era.

At the core of that mission is Glastris' editorial philosophy that mainstream journalism today is strangled by the desire to seem so unbiased that no sides are ever taken. His aim is to produce "journalism that is so good and different that it should show the way forward," he says. "We do that by reporting those political stories others are talking about but aren't writing about. For example, in the January 2005 edition we had an article about Democratic campaign strategists who keep losing but have a virtual monopoly on Democratic campaigns. We know that article was on every congressional desk the next morning." Glastris is certain that anything less unique would not interest his core audience of elected officials, political operatives and journalists.

If that brand of aggressive journalism is a return to the magazine's roots, Glastris wanted to make equally sure the magazine was relevant in today's political environment. For most of the magazine's history, Democrats held much of the power in Washington -- so the Monthly focused on agencies and programs, looking at the rights and wrongs of initiatives. But as the Republicans swept aside the Democrats, Glastris says the political focus in Washington shifted from agencies and programs to ideologies and powerful personalities, especially with the rise in influence of lobbyists that line Washington's K Street. It is that story of parties and ideology rather than big government that Glastris believes needs to be told today.

No squabbling in the school yard
While the Monthly's formula has been updated, so has the view of its competition. Even with all the other political publications vying for readers and the limited foundation funds available (several other political magazines have also taken the not-for-profit route), neither of the Monthly's owners thinks they have any competition. Rather, they argue the Monthly occupies a unique space in political journalism, while other left-wing political magazines, such as the American Prospect and The New Republic, are viewed as occupying different spaces on the political spectrum.

Rather than engaging in cut-throat competition, Glastris and Kounalakis are instead looking for ways to collaborate with these magazines that might normally be considered direct competitors. They already share subscriber lists and are actively exploring ways to cooperate in distribution or other areas of operations. It is the kind of collaboration that Kounalakis says small independent publications need to do if they are going to "simply survive." Their enemy is not each other, but rather the brutal new economics of their industry.

An online future
Kounalakis, however, has no intention of merely surviving. His efforts today are focused on how to extend the Monthly's influence. He has concluded that while the magazine will always be the flagship of the Washington Monthly brand, the future isn't on paper. Rather, in an era when the audience looks to get its information ever more quickly -- and the mail, the main form of distribution, seems to move ever more slowly -- it's time to redirect the Monthly's marketing strategy online.

The strategy here is yet another case of shunning the obvious. Glastris and Kounalakis saw little point in just putting the magazine on the Internet since they believed this would likely do little to extend the influence beyond the current readership. Rather they looked at the Internet and saw that "a lot of magazine writers are bloggers. So we went out and got ourselves a blogger," said Glastris.

The Washington Monthly's website today is fronted by a blog written by Kevin Drum, a former software marketing executive who, before joining the Monthly, had previously made a name for himself on his blog Calpundit. Drum is paid a base salary plus a commission based on advertising revenue. While he links to Washington Monthly print content, Drum has the independence to link to whatever he wants. Glastris describes the editorial relationship: "Kevin and I e-mail and talk all the time, sharing thoughts and story ideas. But we don't really coordinate editorial tone. Whatever similarities in tone are evident has to do with the fact that we specifically selected a blogger whom we like and generally agree with."

This strategy has been surprisingly successful. While the magazine has 30,000 readers, the website gets 50,000 hits a day, which puts it among the top 10 most-visited and linked-to political blogs in the United States. The number of visits to the site peaked on election night 2004, when the site got 199,999 hits. Interestingly, just as the Discovery Times Channel brought the Times a new audience, the Internet is bringing to the Monthly readers who Glastris believes are younger and more aggressive in their liberal politics than the print audience.

The growing online audience has attracted advertisers who are helping the website portion of the Monthly get close to breaking even financially. The challenge to Kounalakis now is to expand this success beyond the main website.

He has devised what he calls a "trade industry" publication model where Web pages will specialize in the different policy arenas. The strategy is designed to expand both influence and introduce a new revenue stream.

The strategy calls for the main homepage to remain a general political news website and blog, while specific policy discussions, such as healthcare or social security, will get their own home, linked like tentacles off the main site. In Kounalakis' vision, "Those discussions will be at a high level. Not mass market. People who are focused on these issues can put work on the Web. We will try to develop the website to have a scalability aspect, while replicating the look at feel of The Washington Monthly's current site. Each will be thematically specific."

The hardest part of this expansion will be finding the right people to moderate and lead each specialized discussion. Kounalakis has targeted people already active in the topic areas. There is also minimal marginal cost since these new site hosts will be paid on commission based on advertising revenue, just as Drum currently is. Kounalakis is confident that such forums can not only be highly influential, satisfying the Monthly's mission, but also attracting specialized advertising.

The mouse that roared
Monthly Associate Editor Carl Iseli likes to describe the magazine as "the mouse that roared," because its influence far outstrips its size. Four years after taking ownership of The Washington Monthly, the Glastris-Kounalakis team is well on its way to making that a very loud roar.

As noted above, they have already doubled readership. Financially, the magazine's revenue from advertising and subscriptions still does not cover its costs, but it is in the black when revenue from foundations and other funders is included.

The Glastris-Kounalakis team has found that rather than weakening journalism, its sharply-focused understanding of its business has allowed it to design a marketing strategy with a clear balance between the business and editorial objectives. "Today, we are now a modern, professional company," says Glastris describing his magazine's sustainable business model. For The Washington Monthly, business, after all, is just a means to a mission end, "There is an epic battle going on in the body politic and we are a part of it." That's why Glastris doesn't mind working so hard.





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The U.S. military, struggling to fill its voluntary ranks, is allowing recruits to meet part of their reserve military obligations after active duty by serving in the Peace Corps. Read why there is opposition to the program among RPCVs. Director Vasquez says the agency has a long history of accepting qualified applicants who are in inactive military status. John Coyne says "Not only no, but hell no!" and RPCV Chris Matthews leads the debate on "Hardball." Avi Spiegel says Peace Corps is not the place for soldiers while Coleman McCarthy says to Welcome Soldiers to the Peace Corps. Read our poll results. Latest: Congress passed a bill on December 22 including language to remove Peace Corps from the National Call to Service (NCS) military recruitment program

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170,000 is a very special number for the RPCV community - it's the number of Volunteers who have served in the Peace Corps since 1961. It's also a number that is very special to us because March is the first month since our founding in January, 2001 that our readership has exceeded 170,000. And while we know that not everyone who comes to this site is an RPCV, they are all "Friends of the Peace Corps." Thanks everybody for making PCOL your source of news for the Returned Volunteer community.


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